Barry Fitzpatrick is group managing director of South Australia’s only publicly listed regional bank, Adelaide Bank. The bank has more than $5 billion of assets and is in the top 150 companies in Australia. Fitzpatrick was the architect of the merger between the Co-operative Building Society and the Hindmarsh Building Society, forming the Co-operative Building Society of South Australia. In 1994, this became Adelaide Bank Limited. He is a Fellow of the Australian Institute of Management.
AIM: To what do you attribute your rise in the company?
Fitzpatrick: I have no idea. It was so long ago.
AIM: So, it was not the result of any planning or premeditation?
Fitzpatrick: I think that people who are ambitious are ambitious. They are the ones who work hard to get there.
AIM: Did you have much training?
Fitzpatrick: I did courses in accounting and I went to Harvard Graduate School of Management for three weeks and did a course on strategic marketing.
AIM: What is different about managing a bank?
Fitzpatrick: The managerial philosophy is similar between organisations. With globalisation, market forces are such that there is intense competition out there to develop new products. But the main elements of banking are product development and distribution, which other organisations also have.
AIM: Why is there such negative sentiment in the community about banks?
Fitzpatrick: I think when banks make huge profits criticisms are made of them. But if those profits are analysed in terms of returns on funds or shareholder returns they are not necessarily so good.
AIM: What are you doing to counteract these impressions?
Fitzpatrick: The Adelaide Bank has a foundation. The funds are distributed by an independent board to people who are in need.
AIM: Is that enough?
Fitzpatrick: I think there is a need for communication. If people thought hard about it, they would conclude that they prefer Australian banks more than those of other countries, where the banking system is not as solid. Australian banks are among the best in the world. The community understands that, but they don’t seem to have the same respect for banks as they have for other industries. We rode out the Asian crisis exceptionally well. Australian banks are regarded very well in the world. A lot of that is due to political stability and the regulators, but the banks are important as well.
AIM: I suppose in the 1980s they learned their lessons.
Fitzpatrick: I think banks made every mistake in the book (then). But we are still here.
AIM: What will banking look like in a decade?
Fitzpatrick: The function of banks is changing. Banks manufacture, process and deliver financial products to the marketplace. Banks need to understand these factors; there is far less emphasis on bricks and mortar and over-the-counter transactions. Already, 85% of Adelaide Bank’s transactions are done electronically.
AIM: How does that affect your contact with customers?
Fitzpatrick: It means that you have to communicate with the customer by different means: Internet and direct mail. But I think banks must continue to talk to customers face-to-face.
AIM: How is technology affecting your labor and capital expenses?
Fitzpatrick: The staff levels at the bank have remained static as the asset base has grown, so productivity has risen. Back-office areas have fallen dramatically as we implement state-of-the-art technology. We process $400 million of mortgages a month at a cost of $150 a mortgage. It would have cost us double that before.
AIM: Presumably, many of the repetitive jobs have disappeared with the technological changes. How has this changed the management environment?
Fitzpatrick: Many of the more repetitive jobs are being taken over by technology. We have a well-educated work place that leads to efficiency, but it is important to communicate with the staff. I meet all the young staff, and I ensure the staff are aware of any announcement that I make. They should not read it in the paper.
AIM: What is the difference between operating in a mutual structure and a listed company?
Fitzpatrick: They are both open environments, but we are now owned by shareholders as distinct from customers. I think we have a stronger focus on profits when we are owned by shareholders, and we pay more attention to efficiency.
AIM: What advice would you give younger managers?
Fitzpatrick: A good education is important. You need at least two degrees. Then it just comes down to experience, which should be as wide as possible.